A BANANA industry representative said Filipino banana exporters might lose the South Korean market to Central American exporters if the government will not push for the elimination of tariffs on Philippine bananas in the East Asian nation.
“Cheap banana imports from Central America have started to eat into the share of Philippine bananas in the Korean market and these could totally push us out of the picture by 2022 unless we get same zero-tariff treatment as they do,” said Pilipino Banana Growers and Exporters Association (PBGEA) executive director Stephen Antig.
According to PBGEA, losing the Korean market will affect 32,000 workers who could lose their jobs and their over 200,000 dependents. The industry could lose revenues amounting to US$300 million while the government would lose P6.5 billion in local and national taxes.
PBGEA has urged the Philippine government to lobby for the lifting of the 30 percent tariff on Philippine banana export in order not to lose the Korean market.
“What we can do is to come up with a separate bilateral agreement with Korea removing the import tariff on Philippine bananas,” Antig said.
He added the high import tariff on Philippine bananas is shouldered by the buyer in Korea.
“So even if our country is geographically nearer, a businessman planning to sell the fruit in that country would prefer to buy from Central America because of the zero tax,” Antig said.
PBGEA president Alexander Valoria said in a statement that the Central American countries of Costa Rica, El Salvador, Honduras, Nicaragua, and Panama will benefit from zero import tariffs on the bananas they export to South Korea by 2021.
“Peru is already enjoying zero tariffs on their banana exports to South Korea while Colombia will get the same treatment also three years from now. Even Vietnam, a fellow Asean economy of the Philippines, will get to sell bananas to South Korea with zero tariff by 2021,” Valoria added.
Valoria said while Central American countries recently signed a free trade accord with South Korea as a bloc, Costa Rica, El Salvador, Honduras, Nicaragua, and Panama were also able to forge separate bilateral agreements with the Asian country in favor of their agricultural exports.
Based on the data from PBGEA, South Korea buys about 30 million boxes of Philippine bananas from a production area of 8,000 hectares, or the equivalent of 390,000 tons.
Valoria said the bilateral trade between the Philippines and Korea heavily favors the latter. South Korean exports to the Philippines amounted to $10.6 billion in 2017 compared to the $3.7 billion Philippine exports to Korea in the same year.
Antig said the trade imbalance can be resolved if the Philippines can get more favorable terms in exporting agricultural products to Korea.
“With the widening agricultural trade deficit, we appreciate the call of Socioeconomic Planning Secretary Ernesto Pernia for increased government support to aid Philippine exports. But beyond doubling efforts to market the country’s export products, the government must assess the benefits and disadvantages of existing free trade agreements to reverse trade imbalances with bilateral or multilateral partners, as in the ASEAN-Korea Free Trade Area (AKFTA),” Antig said.